Correlation Between Formation Minerals, and Zhihu

Can any of the company-specific risk be diversified away by investing in both Formation Minerals, and Zhihu at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Formation Minerals, and Zhihu into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Formation Minerals, and Zhihu Inc ADR, you can compare the effects of market volatilities on Formation Minerals, and Zhihu and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Formation Minerals, with a short position of Zhihu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formation Minerals, and Zhihu.

Diversification Opportunities for Formation Minerals, and Zhihu

-0.01

Correlation Coefficient

Formation Minerals,  Zhihu

Good diversification

The 3 months correlation between Formation and Zhihu is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Formation Minerals, and Zhihu Inc ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhihu Inc ADR and Formation Minerals, is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Formation Minerals, are associated (or correlated) with Zhihu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhihu Inc ADR has no effect on the direction of Formation Minerals, i.e., Formation Minerals, and Zhihu go up and down completely randomly.

Pair Corralation between Formation Minerals, and Zhihu

Given the investment horizon of 90 days Formation Minerals, is expected to generate 4.73 times more return on investment than Zhihu. However, Formation Minerals, is 4.73 times more volatile than Zhihu Inc ADR. It trades about 0.13 of its potential returns per unit of risk. Zhihu Inc ADR is currently generating about -0.05 per unit of risk. If you would invest  3.42  in Formation Minerals, on September 24, 2024 and sell it today you would earn a total of  0.77  from holding Formation Minerals, or generate 22.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Formation Minerals,  vs.  Zhihu Inc ADR

Formation Minerals,

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Formation Minerals, are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent primary indicators, Formation Minerals, demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Zhihu Inc ADR

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Zhihu Inc ADR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal technical indicators, Zhihu may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Formation Minerals, and Zhihu

The main advantage of trading using opposite Formation Minerals, and Zhihu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formation Minerals, position performs unexpectedly, Zhihu can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Zhihu will offset losses from the drop in Zhihu's long position.

The idea behind Formation Minerals, and Zhihu Inc ADR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.